Morgan's Consulting bought a scanner worth $5,000 with an expected life of 7 years and a residual value of $1,500. What is the adjusting journal entry for the first year?
A) Scanner 500 Depreciation Expense 500
B) Scanner 500 Accumulated Depreciation, Computer 500
C) Depreciation Expense 500 Scanner 500
D) Depreciation Expense 500 Accumulated Depreciation, Scanner 500

Question

Quizplus · Accepted Answer

D is the correct choice as it reflects the adjusting entry required for the first year of straight-line depreciation using the formula (Cost - Residual Value) / Useful Life. This formula gives us a depreciation expense of $643 per year for Morgan's Consulting. Therefore, the adjusting entry for the first year should be to debit Depreciation Expense for $500 and credit Accumulated Depreciation, Scanner for $500.

Morgan's Consulting Bought a Scanner Worth $5,000 with an Expected